Construction, Forestry, Mining and Energy Union v; Coffs Harbour Hardwoods (Sales) Pty Ltd

[2005] FCA 465

FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining and Energy Union v
Coffs Harbour Hardwoods (Sales) Pty Ltd [2005] FCA 465

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION v
COFFS HARBOUR HARDWOODS (SALES) PTY LTD

N900 of 2004

WHITLAM J
22 APRIL 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N900 OF 2004

BETWEEN:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION APPLICANT
AND:	COFFS HARBOUR HARDWOODS (SALES) PTY LTD RESPONDENT
JUDGE:	WHITLAM J
DATE OF ORDER:	22 APRIL 2005
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.        The proceeding be dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N900 OF 2004

BETWEEN:	CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION APPLICANT
AND:	COFFS HARBOUR HARDWOODS (SALES) PTY LTD RESPONDENT

JUDGE:	WHITLAM J
DATE:	22 APRIL 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This case concerns the dismissal from their employment of Robert Brand, Adam Philp and Ronald Seckold.  Each of these men was employed in a business at Glenreagh known as Coffs Harbour Hardwoods carried on by the respondent, Coffs Harbour Hardwoods (Sales) Pty Ltd, and another company, Coffs Harbour Hardwoods (Trading) Pty Ltd.  The evidence does not disclose how these two companies organized this business between themselves.  Both companies are bound by the Timber and Allied Industries Award 1999 (‘the Award’) made under the Workplace Relations Act 1996 (‘the Act’). However, by their pleadings on the statement of claim, the parties may be taken to accept for the purpose of this proceeding that the business at Glenreagh was that of the respondent and that the respondent was the employer of Mr Brand, Mr Philp and Mr Seckold. The applicant Construction, Forestry, Mining and Energy Union (‘the union’) alleges that, in dismissing these employees, the respondent contravened s 298K(1) of the Act.

2. Glenreagh is a town located approximately half-way along the railway line between Coffs Harbour and Grafton.  The respondent operates a sawmill there.  For the past 15 years it has also treated hardwood poles and girders.  In 1998 the respondent developed its operations into drying and dressing.  This lastmentioned process is undertaken in a discrete section of the Glenreagh site referred to as the board plant where floorboards are produced.  This case is concerned with employment in the board plant.

3. The respondent is a family firm founded by the late father of its present directors.  The business is run by one of the founder’s sons, Garry McCarthy, who is the general manager.  He has been supported since May 2002 by Rob Young, an employee with a professional engineering background, who deals with ‘administrative and management challenges’.

4. Arturo Noel Menon is the North Coast organiser of the NSW Branch of the union’s Forestry and Furnishing Products Division. He visited the Glenreagh site for the first time on 4 November 2002 in order to discuss with Garry McCarthy payment by the respondent of superannuation contributions to a fund other than the Timber Industry Superannuation Scheme (‘TISS’). Mr Menon also asked Garry McCarthy a number of questions about other industrial matters. On 25 and 26 November 2002 Mr Menon returned to the site with another union organiser, Karin Edwards, and they spoke to employees of the respondent about the provisions of the Award governing superannuation contributions by employers. Following that visit, Mr Menon arranged for the union to initiate a bargaining period for a certified agreement under the Act in respect of the respondent’s employees. That was done on 28 November 2002. The next day, 29 November 2002, Mr Menon met several employees of the respondent at a hotel in Glenreagh and discussed how the union could advance their interests. Five employees joined the union.

5. On 2, 12 and 16 December 2002 Mr Menon visited the respondent’s Glenreagh site and discussed with Garry McCarthy the deduction of union contributions from wages.  On 16 December 2002 he also distributed additional information on TISS.

6. Craig Smith, the union’s divisional branch secretary, wrote to Garry McCarthy on 16 December 2002 informing him that on 18 December 2002 Mr Menon intended to exercise his statutory right to inspect the respondent’s time and pay sheets in order to investigate suspected breaches of the Award.  Mr Smith also notified the Australian Industrial Relations Commission (‘the Commission’) on 16 December 2002 of an industrial dispute between the union and the respondent in respect of superannuation contributions, payment of overtime, public holidays and lack of consultation about occupational health and safety.  Mr Menon did inspect the respondent’s records on 18 December 2002.  He formed the view that the respondent was not observing the Award provisions governing penalty rates for overtime, loadings for casual employment and annual leave, and payment of wage rates at appropriate skill levels.

7. The industrial dispute was the subject of a conciliation proceeding before a member of the Commission on 20 December 2002.  On 15 January 2003 the union distributed a bulletin to its members employed by the respondent.  Its tone was very positive and quite triumphant.  The bulletin lauded the efforts of ‘your new Delegate, Peter Smithers’ and said that the respondent confessed to various underpayments and breaches of the Award.  The union reported that it walked away from the hearing with commitments from the respondent to pay superannuation contributions to TISS.  The bulletin concluded by informing members that Mr Menon and Ms Edwards would be visiting their workplace on 21 and 22 January 2003 to hold further discussions with the respondent’s management and to conduct preliminary negotiations for an enterprise agreement.  Subsequently the union received complaints from members alleging discrimination and harassment by the respondent.  Mr Menon did visit Glenreagh on 21 and 22 January 2003 and provided the respondent with draft enterprise agreements.  More significantly, on 23 January 2003 Garry McCarthy signed an agreement on behalf of the respondent reflecting ‘its commitments arising out of the dispute hearing… on 20 December 2002’.  These undertakings were broadly in line with those described in the union’s bulletin of 15 January 2003.  However, one ‘point of concern’ was new.  The agreement stated on this topic:

   ‘4.The company acknowledges each employee’s Freedom of Choice to be or not to be a member of an industrial organisation of employees.  The company will not provoke or tolerate any type of discriminatory or harassing behaviour from any employee of the company, on or off the premises, towards another with respect to this choice.’

8. On 20 February 2003 Mr Menon and the union’s safety organiser, Adam Lincoln, visited the respondent’s premises at Glenreagh and conducted a safety audit.  At the conclusion of that visit Mr Lincoln issued Garry McCarthy with 10 ‘safety rectification’ notices on behalf of the union.  Some notices related to the site generally and others to building work being undertaken, but most notices related specifically to the board plant.  Mr Menon went back to the site on 3 March 2003 with Michael Cameron, an inspector from the Grafton office of the NSW WorkCover Authority (‘WorkCover’).  They met Garry McCarthy and Mr Young.  Following his inspection Mr Cameron issued the respondent with a number of improvement notices under the Occupational Health and Safety Act 2000 (NSW).

9. Mr Menon was most dissatisfied with the way in which Mr Cameron carried out his inspection.  On 17 March 2003 he again visited the site following further complaints from the union delegate, Mr Smithers, to the effect that the drinking water available from the tap in the lunch-room at the board plant contained traces of arsenic from the chemicals used in treating timber.  Mr Lincoln also spoke to Mr Cameron about outstanding safety issues but received no satisfactory action.  On 19 March 2003 Mr Smith wrote to Mr Cameron’s superior, formally complaining on behalf of the union about the adequacy of Mr Cameron’s inspection.  In a five-page letter, he concluded by saying that the respondent was using the ‘clean bill of health’ provided by Mr Cameron to contest the concerns about safety raised by the union.  On 24 March 2003 Mr Menon reported to employees on site water test results given to him by Mr Young.

10. On 3 April 2003 Steve McMartin, an inspector from WorkCover’s Newcastle office, attended the Glenreagh site with Mr Menon and Mr Lincoln.  This time it appears that the inspector may also have met the employees’ occupational health and safety representative, John Grantham, on site.  Mr McMartin subsequently issued Garry McCarthy with 5 fresh improvement notices.

11. Mr Menon met Garry McCarthy and Mr Young in May 2003 to discuss putting in place at the site a disputes resolution procedure in accordance with the Award.  In July 2003 the union notified the Commission of an industrial dispute with the respondent about the harassment, bullying and vilification of employees and, in particular, of Mr Smithers.  Mr Menon also exercised his statutory rights to inspect the respondent’s pay and time sheets and to hold discussions with its employees, and the union instituted proceedings in the Commission in respect of the respondent’s termination of the employment of Tim Purvis, one of its members at the site.  (This proceeding was discontinued on 5 August 2003.)

12. On 29 August 2003 Mr Menon and Mr Lincoln visited Glenreagh in order to follow up the safety concerns raised at the inspections in March and April 2003.  Afterwards, they apparently spoke about some matters to Mr Young, who was unable to satisfy their requests for information.  In early September 2003 Mr Smithers informed Mr Menon that his employment with respondent had been terminated.  On 16 September 2003 the union commenced proceedings in the Commission on behalf of Mr Smithers.  These proceedings were discontinued on 25 November 2003 following a settlement agreement reached in a conciliation conference.  Subsequently, Mr Menon attended the Glenreagh site on numerous occasions to speak with members and the respondent’s management on a variety of issues.

13. Early in 2004 a dispute broke out about the time for taking meal breaks.  Eddie Fisher was the floor supervisor in the board plant.  He was absent on sick leave from Christmas 2003 until the end of February 2004.  During this time and whilst his position was filled by Paul Wyld, the break times were changed from 9.30 am to 10.00 am for morning tea and from 12.30 pm to 1.00 pm for lunch.  The new times were popular with the employees and worked well.  On 5 March 2004 at a ‘toolbox meeting’ in the board plant held at the commencement of work, Mr Fisher announced that break times would revert to the previous pattern.  Mr Brand protested.  At 9.30 am that day several employees, including Mr Brand, Mr Philp and Mr Seckold, worked on until 10.00 am and took their morning tea break at that time.  This action led to a fracas between Mr Fisher and Mr Brand in which Mr Brand was threatened with dismissal.

14. After the weekend, at the commencement of work on 8 March 2004 at a meeting in the board plant, Mr Brand tried unsuccessfully to discuss the break times with Garry McCarthy.  Later that afternoon Mr Brand contacted Mr Menon about this issue.  Mr Menon then spoke to Mr Young and to an officer of the Timber Trade Industrial Association (‘TTIA’).  On 9 March 2004 Mr Menon came to the Glenreagh site.  He spoke to a number of board plant employees at lunchtime. During the day he discussed with Mr Young the break times and other industrial issues.  In the course of these discussions Mr Menon told Mr Young that Mr Brand was the union’s interim delegate at the site.  Later in the week Mr Brand spoke to Mr Young about a number of industrial matters.  The union threatened to notify the Commission of an industrial dispute relating to the meal breaks.  Mr Young contacted Mr Menon, and the union agreed not to notify a dispute in order to give Mr Brand and Mr Fisher an opportunity to come to an accommodation.  Those two men met just before work on 15 March 2004, after which a meeting of the board plant employees voted to adopt their recommendation that breaks should be taken at 9.30 am for morning tea and at 1.00 pm for lunch.  Mr Fisher reported this result to Mr Young, who then came to the board plant and confirmed the new arrangement with Mr Brand. 

15. On 18 March 2004 the respondent dismissed five employees in the board plant with effect from the close of business next day.  They included Mr Brand, Mr Philp and Mr Seckold.  Mr Brand had commenced employment with the respondent in February 2001.  He joined the union in November 2002 and, throughout the period of subsequent union activity at Glenreagh, he worked outside the shed as a stacker.  Mr Philp began working for the respondent as a casual employee in February 2003.  He only joined the union after he was made permanent on 12 December 2003.  At the time of his dismissal Mr Philp was performing duties as a forklift driver.  Mr Seckold had been employed since May 2003 on a casual basis as a stacker.  He joined the union on 9 March 2004.  Each of Mr Brand and Mr Philp was given a letter signed by Garry McCarthy informing him that his position had been affected by a restructure of the respondent’s ‘work operations’.  Garry McCarthy read a screed to similar effect to Mr Seckold.  All three men were also told by Garry McCarthy that in future the respondent would be using the services of Jigsaw Personnel, a firm specialising in labour hire and recruitment for the timber industry.  They were given a card to contact that firm if they wished to register for any work that might become available with the respondent.

16. The decision to dismiss a number of employees was taken following a trip made the previous week by Garry McCarthy to Queensland.  (He had originally initiated contact with Jigsaw Personnel, whose head office is in Brisbane, in October 2002.  In February 2004 he obtained from Jigsaw Personnel’s regional manager in Tamworth details of rates charged by them for providing staff classified as Level 2 and Level 3 under the Award.)  Garry McCarthy was particularly impressed by the use of labour hire at a sawmill he visited in Maryborough.  On 15 March 2004 he told Mr Young that the staff in the board plant was to be reduced by the end of the week to a core group necessary to maintain production.

17. On 16 March 2004 the identity of the employees to be dismissed was discussed at a meeting Garry McCarthy and Mr Young had with two senior supervisors, Mark Triplett and Matt White.  Mr Triplett was the board plant supervisor.  The TTIA had recently conducted a review for the respondent of the Award classifications for various jobs, including those in the board plant.  Garry McCarthy outlined his plan to reduce the workforce to the minimum required to maintain production whilst new machines were installed.  He explained that additional labour requirements in future would be provided by Jigsaw Personnel.  Mr Young, Mr Triplett and Mr White gave Garry McCarthy their opinions about the skills of individual employees in the board plant.  It was not put to any of these witnesses that the topic of an individual’s union membership or union activity was discussed at this meeting.  Mr Triplett advised, in particular, on the minimum number of positions required in the shed.  The only true trade position was machinist.  All the other positions involved skills learned on the job in the industry.  Mr Triplett also made it clear that, whilst all stackers were trained in grading, that fact alone did not make them suitable for a job as a grader.  The discussion lasted for three-quarters of an hour to an hour.  The view was taken that only one outside stacker was required.  Mr White was the supervisor of outdoor staff.  Two men worked as outside stackers in the board plant, Tim Arthur and Mr Brand.  Mr Arthur was a very energetic worker.  He also suffered an intellectual disability and was assisted by a local disability support group called Key Employment.  Garry McCarthy decided to keep Mr Arthur and dismiss Mr Brand.  He, of course, made all the decisions as to which persons were to be dismissed.  In addition to Mr Seckold, three other casual employees were dismissed: Matthew Goodwin and Tristan Nichols with effect next day and Stephen Wyld as soon as he recovered from an injury for which he was receiving workers compensation.

18. Hostility towards the union and the respondent’s employees who joined the union was the subject of much evidence.  I am quite satisfied that some members of the McCarthy family were antagonistic towards Mr Smithers and Mr Brand on account of their union activities.  After all, Mr Menon brought to light shameful instances of underpayment of its workers by the respondent.  This must have caused considerable loss of face and reputation in a small rural community.  The resentment was made manifest in a variety of ways.  Garry McCarthy cancelled the board plant Christmas party in 2002.  Mr Brand, who lived to the south of Glenreagh in the village of Nana Glen and often relied on a lift to work, was left by the side of the road and ignored by members of the McCarthy family who had previously picked him up.  Garry McCarthy’s brother, Bill, and his son, Scott, deny making hostile statements attributed to each of them by Mr Brand.  I do not accept those denials.  Moreover, I think it likely that Garry McCarthy himself expressed displeasure to Mr Brand about his union membership.  Things obviously came to a head at the beginning of 2003, resulting in the ‘freedom of choice’ clause in the letter signed by Garry McCarthy.  Mr Brand is a big man, and he projects an exuberant personality.  I thought he gave his evidence very carefully and acknowledged that there were occasions on which he had needlessly used offensive language.  No one in a managerial or supervisory position with the respondent would have been left in any doubt from the end of 2002 onwards that he was an active and enthusiastic member of the union.  The evidence left me with the impression that certain supervisory staff considered that they could ingratiate themselves with the McCarthys by displaying an anti-union attitude.  This may have led persons such as Mr Triplett and Mr White to make statements to employees without any justification.  Extravagant language may also have been directed on occasions towards Mr Brand, but I doubt that he felt physically threatened by such banter.  (I exclude Mr Young from any suggestion of inappropriate behaviour.  He appears to have conducted himself with punctilious correctness in his dealings with the union.)  In particular, I cannot believe that the identity of union members was not a topic of discussion amongst management and supervisors.  I accept Paul Wyld’s evidence to the effect that, when he joined the respondent in July 2003, there was a lot of such talk. 

19. The only person whose motivation ultimately counts in this case is Garry McCarthy.  He denies dismissing the three men in question on account of their union membership.  Counsel for the respondent accepts that his client bears the onus of proving that the dismissals were not for a prohibited reason.

20. Garry McCarthy did not know that either Mr Philp or Mr Seckold was a member of the union.  No one ever told him they were, although he grudgingly allowed that he suspected they might be.  Garry McCarthy had been told, probably by Mr Young, that Mr Brand was the acting union delegate.

21. I find the reasons advanced by Garry McCarthy for the reduction in numbers to be credible.  It does not matter whether the so-called restructure has turned out to be a success in commercial terms.  Labour hire is a fashionable concept.  Hard-headed businessmen are as susceptible to such fads as callow media pundits.  Garry McCarthy conceded that Jigsaw Personnel had not located timber graders with the experience required by the respondent.  Mr Grantham, who was one of the employees retained by the respondent, gave evidence of junior staff with no experience having since been made available by Jigsaw Personnel.  Mr Grantham also gave evidence about current orders and production in the board plant and about the performance of the new equipment installed following the dismissals in March last year.  It may well be that hoped-for advantages in the new ‘flexible’ arrangements have not materialized, yet I accept the bona fides of Garry McCarthy’s intentions.

1. It was also sought to impugn Garry McCarthy’s sincerity by reference to what he said about the security of the respondent’s timber supply.  Mr Smith gave evidence about this topic and the general demand for floorboards in the building market.  Garry McCarthy was also cross-examined about statements made in the respondent’s application for funding under the Forestry Industry Structural Adjustment Package.  None of this evidence persuades me that his reasons for moving to labour hire were not genuine.

2. That leaves the selection of the persons to be dismissed.  It is true that two casual employees were kept on, but one of them was a member of the McCarthy family.  Mr Philp struck me as a totally reliable witness.  At the ‘toolbox meeting’ on 5 March 2004 he was very upset that grading certificates earned by him and some of the others were not available.  His behaviour prompted Garry McCarthy to convene the meeting before work on 8 March 2004, but this question did not result in any industrial action.  Moreover, the persons attending the meeting with Mr Menon next day included Steven Booker and Josh Howard, both of whom were not dismissed.  (Mr Howard is also a member of the union.)  Mr Seckold gave evidence that he had constantly sought to be paid at a higher Award classification level and that, when he was dismissed, Garry McCarthy said that he was restructuring the business ‘because there’s been some pay disputes here’.  Garry McCarthy denies making a statement to that effect, and I accept this denial.  He had a prepared screed, and I am sure that in the circumstances he stuck to it.  Mr Seckold must have been confused.

3. The meal breaks imbroglio was not significant.  It was caused by the overzealousness of Mr Fisher.  Mr Menon ended up having to come back to Glenreagh, but it is obvious enough that Garry McCarthy did not regard this question as a big problem.  He left it up to Mr Young to solve in discussion with Mr Menon, and by the end of the week they achieved a commonsense solution.  Mr Brand might have made a noise about the issue for recruitment purposes, but I find that the dismissal decisions made on 16 March 2004 were not influenced by this dispute. 

4. There is a sterile argument in this case about whether Mr Brand was ever a ‘delegate’ of the union for the purpose of s 298L(1)(a) of the Act. The union alleges in its application for orders under s 298U of the Act that the respondent dismissed the subject employees for reasons that included the prohibited reasons specified in pars (a) and (l) of s 298L(1) of the Act. In light of the findings that I have made, no nice legal analysis of the Act or of any authorities is required. I am quite satisfied that the respondent has proved ‘otherwise’ as required by s 298V of the Act.

5. The union, and Mr Menon in particular, have shown commendable courage and determination in pursuing the rights of workers employed by the respondent in what must have been occasionally a very hostile environment.  This proceeding must, however, be dismissed.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam.

Associate:

Dated:             22 April 2005

Counsel for the applicant:	A M Slevin
Solicitors for the applicant:	Maurice Blackburn Cashman
Counsel for the respondent:	A T Britt
Solicitor for the respondent:	Janet M Williams
Dates of hearing:	2, 3, 4 and 30 November 2004
Date of judgment:	22 April 2005